Levi buys K84000 worth of government bonds for a period of five years. The bonds pay a flat rate of 8.2% p.a. interest, payable quartly.
1. Calculate the total amount of interest paid to Levi over the five years.
2. What is the quartly interest payment that Levi receives?
1. To calculate the total amount of interest paid to Levi over the five years, we first need to determine the annual interest earned on the government bonds.
Annual interest = 8.2% * K84000 = K6888
Since the interest is paid quartely, the quarterly interest would be:
Quarterly interest = Annual interest / 4 = K6888 / 4 = K1722
To calculate the total amount of interest paid over five years, we multiply the quarterly interest by the number of quarters in five years which is 20.
Total interest = Quarterly interest * Number of quarters = K1722 * 20 = K34440
Therefore, Levi will receive a total amount of K34440 in interest over the five years.
2. To calculate the quarterly interest payment that Levi receives, we already determined it to be K1722 in the previous calculation.
Therefore, Levi will receive K1722 as a quarterly interest payment.